Suppose that at the beginning of 2020 Jamaal's basis in his S corporation stock was $32,000 and Jamaal has directly loaned the S corporation $9,910. During 2020, the S corporation reported an $84,500 ordinary business loss and no separately stated items. How much of the ordinary loss is deductible by Jamaal if he owns 50percent of the S corporation?
A)$9,910
B)$32,000
C)$41,910
D)$42,250
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Jamaal can deduct the loss up to his stock basis and loan basis combined, which is $32,000 + $9,910 = $41,910.

Suppose That at the Beginning of 2020 Jamaal's Basis in His